Mergers, acquisitions make IT integration complex

The increasing frenzy to merge, acquire, and divest, fostered in part by the new Internet economy, is creating a major IT challenge. And, unfortunately, IT is often viewed as part of the problem rather than as a key component of the solution.

Last week's announcement by Mobil and Exxon about the details of their $2.8 billion merger highlights some of the issues swirling around a merger between giants.

Points of contention range from choosing best-of-breed enterprise resource planning applications, to deciding what Mobil and Exxon intranet sites to deploy on each company's system, according to one oil and gas industry analyst who declined to be identified.

Other issues include which Windows operating system to standardise on and merging disparate messaging solutions.

Among many CEOs and chief financial officers, IT is viewed as an albatross rather than a help in mergers and acquisitions, according to Denis C. Picard, Partner/Global Leader, Mergers and Acquisitions Risk Services, Operational and Systems Risk Management at PricewaterhouseCoopers, in New York.

"It is the prevalent point of view. But it doesn't have to be," Picard said.

From the 30,000-foot view, giving IT a seat at the negotiating table can determine the success or failure of a merger, according to Picard.

"They come into the deal too late and then wonder why they don't execute better," Picard said.

At ground zero, the solution in many cases is middleware, according to Colin Osborne, CEO of CommerceQuest, a company that focuses on enterprise integration using IBMs MQSeries middleware.

"Middleware allows a company to get the business benefit out of the merger," Osborne said. "It buys a company time until the companies have decided what is their long-term IT infrastructure."

According to Pricewaterhouse-Coopers, divestitures are even more problematic than mergers.

"The carve-out is a nightmare," said Picard, who points to untangling the applications, the people who go with them, the shared network, the assets, and account receivables as key challenges.

But in the age of electronic-business, mergers and divestures are becoming more common and complex.

Jim Hurley, an e-commerce analyst at the Aberdeen Group in Boston, doesn't believe e-commerce adds any new technical hurdles to the merging of two IT organisations.

"It has always been a problem, it is a problem, and will always be a problem," Hurley said.

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